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DIRECTOR'S REPORT

Zota Healthcare Ltd.

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Market Cap. (₹) 448.48 Cr. P/BV 6.51 Book Value (₹) 28.06
52 Week High/Low (₹) 237/175 FV/ML 10/1 P/E(X) 80.83
Bookclosure 26/07/2019 EPS (₹) 2.26 Div Yield (%) 0.55
Year End :2018-03 

The directors are please to present their Annual Report along with the Audited statement of Accounts for the year ended on 31st March, 2018.

FINANCIAL RESULTS (Rs. in Lakhs)

Particulars

For the year ended 3103-2018

For the year ended 31-03-2017

Revenue from operations

7785.15

7158.00

Other Income

151.86

5.64

Profit before tax and Exceptional Items

1136.22

836.17

Exceptional Items

2.04

0

Profit before Taxation

1134.18

836.17

Income Tax

403.74

286.58

Deferred Tax

3.67

-4.52

Profit after Taxation

726.77

554.11

DIVIDEND

The Board is pleased to recommend a dividend of 30% i.e. Rs.3 per equity share for the financial year 2017-18.The dividend if approved by the members will be paid to the members within time limit defined in the Companies Act, 2013.

TRANSFER TO RESERVE

The company does not propose to transfer any amount to General Reserves.

STATEMENT OF COMPANY’S AFFAIRS

- During the year, revenue of the Company increased by 10.80% i.e. from Rs.7163.64 lakhs to Rs.7937.01 lakhs backed by strong growth in export business.

- Profit before tax increase 35.64% i.e. from Rs.836.17 lakhs to Rs. 1134.18 lakhs.

- Profit after tax increase by 31.16% i.e. from Rs.554.11 lakhs to Rs.726.77 lakhs backed by lower interest costs and higher other income.

- During the year, Company has entered into retail pharmacy segment by DAVAINDIA “the Retail Generic Pharmacy Chain”. Under this business segment Company is projecting to develop 3000 DAVAINDIA generic retail stores. In DAVAINDIA Company has launched Generic, Nutraceutical, GYM and Cosmetics products.

MATERIAL CHANGES

There are no Material change occurred between the end of the financial year of the company to which the financial statements related and the date of the report, which is affecting the financial position of the company.

STATUTORY AUDITORS

Members of the Company in 17th Annual General Meeting of the Company appointed M/s D.S.M & Co., Chartered Accountant as a statutory auditor of the Company for the tenure of five years starting from the conclusion of 17th Annual General Meeting till the conclusion of 22nd Annual General Meeting subject to annual ratification by members. Now, pursuant to provisions of section 139(1) of the Companies Act, 2013 read with Companies Amendment Act, 2017 there is no requirement of annual ratification of appointment of a statutory auditor but as per the resolution passed in 17th Annual General Meeting of the Company it is requires to ratify the appointment of statutory auditor. Hence, Board hereby proposes for ratification of appointment of M/s D.S.M & Co, Chartered Accountant as a statutory auditor of the Company. Further, after this ratification no further ratification of appointment of statutory auditor shallbe done and M/s D.S.M & Co., Chartered Accountant shall hold office as a statutory auditor of the Company till the conclusion of 22nd Annual General Meeting of the Company.

EXTRACT OF ANNUAL RETURN

The Extract of Annual Return as required under section 92(3) of the Companies Act, 2013 and Rule 12 (1) of the Companies (Management and Administration) Rules, 2014 in Form MGT-9 is annexed herewith for your kind perusal and information. (Annexure - 1)

COMMENTS ON AUDITOR’S REPORT

The notes referred to in the Auditor Report are self-explanatory and they do not call for any further explanation as required under section 134 of the Companies Act, 2013.

DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Board of Directors comprises of eight directors out of which one is Non-Executive Chairman, one is Executive Managing Director, three are Executive Whole Time Directors and remaining three are Non-Executive Independent Directors. As on date of this report Board of Directors of the company is as follows:

Name of Directors

Category & Designation

Mr. Ketankumar Chandulal Zota

Non-Executive Chairman

Mr. Moxesh ketanbhai Zota

Executive Managing Director

Mr. Himanshu Muktilal Zota

Executive Whole Time Director

Mr. Manukant Chandulal Zota

Executive Whole Time Director

Mr. Kamlesh Rajnikant Zota

Executive Whole Time Director

Mr. Saileshkumar Sevantilal Shah

Non-Executive Independent Director

Mrs. Varsaben Gaurang Mehta

Non-Executive Independent Director

Mr. Mahesh Mavjibhai Prajapati

Non-Executive Independent Director

Pursuant to Sections 149, 152 and other applicable provisions of the Companies Act, 2013, one-third of the directors are liable to retire by rotation, and if eligible offer themselves for re-appointment. In this Annual General Meeting Mr. Kamlesh Rajnikant Zota, Whole-time Director of the Company is liable to retire by rotation and being eligible to offer himself for re-appointment.

The Key Managerial Personnel (KMP) in the Company as per Section 2(51) and 203 of the Companies Act, 2013 are as follows:

Name of Directors

Category & Designation

Mr. Moxesh ketanbhai Zota

Executive Managing Director

Mr. Himanshu Muktilal Zota

Executive Whole Time Director

Mr. Manukant Chandulal Zota

Executive Whole Time Director

Mr. Kamlesh Rajnikant Zota

Executive Whole Time Director

Mr. Viral Mandviwala

Chief Financial Officer

Mr. Ashvin Variya

Company Secretary

MEETING OF THE BOARD OF DIRECTORS:

During the year, there were nine Board meetings held. Details of the same are as follows:

Sr. No.

Date of Meeting

Board Strength

No. of Director Present

1

12/04/2017

8

8

2

18/04/2017

8

8

3

06/05/2017

8

8

4

30/05/2017

8

7

5

28/06/2017

8

7

6

12/07/2017

8

7

7

07/09/2017

8

7

8

14/11/2017

8

8

9

03/02/2018

8

8

Deposits

During the year, Company has not accepted any deposits from public within the meaning of the Section 73 of the Companies Act, 2013.

RELATED PARTY TRANSACTION

With reference to Section 134(3) (h) of the Companies Act, 2013, all contracts and arrangements with related parties under section 188 of the Companies Act, 2013 entered by the Company during the financial year, were in ordinary course of business and at arm’s length basis. Details of the related party transactions made during the year are attached asAnnexure-2 in form AOC-2 for your kind perusal and information.

LOANS, GUARANTEES AND INVESTMENT

With reference to Section 134(3) (g) of the Companies Act, 2013, loans, guarantees and investments made under section 186 of the Companies Act, 2013 are as under:

Sr.

Date of

Name of the Company

Purpose of Transaction

Amount involved in

No.

transaction

Transaction

1

Earlier year

Prime Co-op .Bank

Investment in equity shares

100

CORPORATE SOCIAL RESPONSIBILITY

On recommendation of Corporate Social Responsibility Committee Board has formulated Corporate Social Responsibility Policy and adopted the same. The detailed CSR policy of the Company is available on the link http://www.zotahealthcare.com/images/cms/cmsfile/Corporate Social Responsibility Policy.pdf. Details of CSR activities carried out by the Company are as per Annexure - 3. Corporate Social Responsibility Committee constituted by the Company has met two times during the last year. A detail of the meeting of CSR committee is as follows:

Sr. No.

Date of Meeting

Strength of Committee

No. of Members Present

1

15/06/2017

3

3

2

21/03/2018

3

3

DECLARATION BY INDEPENDENT DIRECTORS

Company has received declaration from all the independent directors duly signed by them stating that they meet the criteria of independence as provided in section 149(6) of the Companies Act, 2013.

NOMINATION AND REMUNERATION COMMITTEE

Company has formulated nomination and remuneration committee comprising three non-executive directors Composition of the Committee is as follows:

Mrs. Varsaben Gaurang Mehta - Chairman & Member

Mr. Mahesh Mavjibhai Prajapati - Member

Mr. Saileshkumar Sevantilal Shah - Member

During the year, three meetings of the nomination and remuneration committee were held. Details of the Meetings are as follows:

Sr. No.

Date of Meeting

Strength of Committee

No. of Members Present

1

15/06/2017

3

3

2

04/07/2017

3

3

3

08/02/2018

3

3

(i) Term of Reference of the Committee

- To identify persons who are qualified to become Directors and who may be appointed in senior management in accordance with the criteria laid down, recommend to the Board their appointment and removal and shall carry out evaluation of every Director’s performance.

- To formulate the criteria for determining qualifications, positive attributes and independence of a Director and recommend to the Board a policy, relating to the remuneration for the Directors, Key Managerial Personnel and other employees.

- The Nomination and Remuneration Committee shall, while formulating the policy ensure that:

(i) the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the Company successfully;

(ii) relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

(iii) remuneration to Directors, Key Managerial Personnel and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals:

- Regularly review the Human Resource function of the Company.

- Discharge such other function(s) or exercise such power(s) as may be delegated to the Committee by the Board from time to time.

- Make reports to the Board as appropriate.

- Review and reassess the adequacy of this charter periodically and recommend any proposed changes to the Board for approval from time to time.

- Any other work and policy, related and incidental to the objectives of the committee as per provisions of the Act and rules made there under.

(ii) Remuneration Policy:

(a) Remuneration to Executive Directors:

The remuneration paid to executive directors of the Company is recommended by the Nomination and Remuneration Committee of the Company and then Board of the Company approve in their duly held meeting. The remuneration of executive directors are decided by considering various criteria like qualification, experience, responsibilities, value addition to the Company and financial position of the Company. Board is taking permission of the members if required at any time for paying remuneration to executive directors.

(b) Remuneration to Non-Executive Directors:

Company is not paying any remuneration to non-executive and independent directors of the Company.

The detailed remuneration policy of the Company is available on the below link: http://www.zotahealthcare.com/images/cms/cmsfile/Policy on Appointment and Remuneration for Direct ors, Key Managerial Personneland Senior Management Employee.pdf

AUDIT COMMITTEE:

Pursuant to requirement of Section 177(1) of the Companies Act, 2013 Company has formulated Audit Committee. Composition of the Audit Committee is as follows:

Mr. Saileshkumar Sevantilal Shah - Chairman & Member Mrs. Varsaben Gaurang Mehta - Member Mr. Himanshu Muktilal Zota - Member

During the year, Audit Committee has met four times details of the same are as follows:

Sr. No.

Date of Meeting

Strength of Committee

No. of Members Present

1

23/05/2017

3

3

2

14/06/2017

3

3

3

14/11/2017

3

3

4

03/02/2018

3

3

The term of references of audit committee are to recommend for appointment of statutory auditor, approve related party transactions, examination of financial statements and auditor’s report, scrutinize inter corporate

loans and investments, evaluation of internal financial control and risk management, review and monitor auditors independence and performance and effectiveness of audit process.

STAKEHOLDERS, SHAREHOLDERS AND INVESTOR GRIEVANCES COMMITTEE

To solve the investors grievances Company has formulated Stakeholder’s, Shareholders and Investor Grievance Committee. Composition of the Committee is as follows:

Mr. Mahesh Mavjibhai Prajapati - Chairman & Member Mr. Himanshu Muktilal Zota - Member

Mr. Manukant Chandulal Zota - Member

During the year, Stakeholder’s, Shareholders and Investor Grievance Committee has met four times details of the meetings are as follows:

Sr. No.

Date of Meeting

Strength of Committee

No. of Members Present

1

01/08/2017

3

3

2

10/10/2017

3

3

3

18/01/2018

3

3

4

06/03/2018

3

3

VIGIL MECHANISM

The Company has established a Vigil Mechanism to deal with instances of fraud and mismanagement, if any.

The policy has a systematic mechanism for directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of the Company’s Code of Conduct or policy. The detailed Whistle Blower Policy & Vigil Mechanism available on below link: http://www.zotahealthcare.com/images/cms/cmsfile/VigilMechanism.pdf

RISK MANAGEMENT

Risks are events, situations or circumstances which may lead to negative consequences on the Company’s business. Risk Management is a structured approach to manage uncertainty. An enterprise wide approach to Risk Management is being adopted by the Company and key risks will now be managed within a unitary framework. As a formal roll-out, all business divisions and corporate functions will embrace Risk Management Policy and Guidelines, and make use of these in their decision making. Key business risks and their mitigation are considered in the annual/strategic business plans and in periodic management reviews. The risk management process over the period of time will become embedded into the Company’s business system and processes, such that our responses to risk remain current and dynamic.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, your directors hereby confirm:

A. That in preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departments;

B. That the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs if the Company at the end of the financial year and of the profit and loss of the Company for that period;

C. That the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company for preventing and detecting fraud and other irregulations;

D. That the directors had prepared the annual accounts on a going concern basis;

E. The directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively;

F. The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

BOARD EVALUATION

The performance evaluation of the board was evaluated by the board after seeking inputs from all the directors on the basis of the criteria such as participation in strategy formulation and decision making; participation in Board and Committee meetings; Directions, views and recommendations given to the Company etc.

The board reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the chairman was also evaluated on the key aspects of his role.

In a separate meeting of independent directors, performance of non-independent directors, performance of the board as a whole and performance of the chairman was evaluated, taking into account the views of executive directors and non-executive directors. Performance evaluation of independent directors was done by the entire board, excluding the independent director being evaluated.

INTERNAL FINANCIAL CONTROL SYSTEM

The Company has a well placed, proper and adequate internal financial control system which ensures that all the assets are safeguarded and protected and that the transactions are authorized recorded and reported correctly. The internal audit covers a wide variety of operational matters and ensures compliance with specific standard with regards to availability and suitability of policies and procedures. During the year no reportable material weakness in the design or operation were observed.

CORPORATE GOVERNANCE:

Your Company has incorporated the appropriate standards for corporate governance. Pursuant to Regulation 15(2) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company is not required to mandatorily comply with the provisions of certain regulations of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Hence, company is not filing Corporate Governance Report to stock exchange quarterly. However, as per Regulation 34(3) read with Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 company is giving report on corporate governance report in annual report of the company. Corporate Governance Report is as per Annexure - 4.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING

With reference to Section 134(3) (m) of the Companies Act, 2013, the details of conservation of energy, technology absorption and foreign exchange earnings are as per Annexure - 5.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As per Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements), Regulation 2015, the Management Discussion and Analysis Report is given in Annexure - 6.

SECRETERIAL AUDITOR

Your board has appointed PCS Ranjit Kejriwal, as secretarial Auditor of the company for the period of 5 consecutive years starting from financial year 2016-17. The secretarial report for the financial year 2017-18 is attached as Annexure - 7.Report of secretarial auditor is self-explanatory and need not any further clarification.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

There was no employee drawing remuneration in excess of limits prescribed under section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The Disclosure pertaining to remuneration as required under section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016 are as per Annexure - 8.

CEO/ CFO CERTIFICATION

In terms of Regulation 17(8) of the Listing Regulations, the CFO has certified to the Board of Directors of the Company with regard to the financial statements and other matters specified in the said regulation for the financial year 2017-18. The certificate received from CFO is attached herewith as per Annexure - 9.

CODE OF CONDUCT

Being a SME listed Company exemption has been provided to the Company from formulating of Code of Conduct for Board of Directors and Senior Management Personnel. However, Board of Directors has formulated and adopted Code of Conduct for Board of Directors and Senior Management Personnel from May 30, 2018. During the year, Board of Directors and Senior Management Personnel has complied with general duties, rules, acts and regulations. In this regard certificate from Managing Directors as required under Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 has been received by the Board and the same is attached herewith as per Annexure - 10.

Code of Conduct form Board of Directors and Senior Management Personnel effective from May 30, 2018 is available on below link:

http://www.zotahealthcare.com/images/cms/cmsfile/Code of Conduct for Board Members and Senior M anagement Personnel.pdf

CORPORATE GOVERNANCE

Corporate Governance is a set of process, practice and system which ensure that the Company is managed in a best interest of stakeholders. The key fundamental principles of corporate governance are transparency and accountability. At Zota, Company’s core business objective is to achieve growth with transparency, accountability and with independency. Company has adopted various corporate governance standard and doing business in ethical way by which Company has enhance stakeholders trust, shareholders wealth creation by improving shares valuation, market capitalization, etc.

A certificate received from M/s D.S.M & Co., Statutory Auditors of the Company regarding compliance of the conditions of Corporate Governance, as required under Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached herewith as per Annexure - 11.

SHARE CAPITAL

During the year, Company had came out with a public issue of 46,80,000 equity shares comprising of offer for sale of 15,00,000 equity shares by promoters and promoters group and fresh issue of 31,80,000 equity shares for Rs. 125 each including a share premium of Rs. 115 per equity shares. All the equity shares issued above are listed on NSE EMERGE platform of NSE, Mumbai. Apart from this Company has not issued any shares with different rights, sweat equity shares or employee stock options.

SUBSIDIARIES, JOINT VENTURE AND ASSOCIATE COMPANIES

The Company does not have any Subsidiary, Holding, Joint Venture or Associate Company.

SEXUAL HARASSMENT OF WOMEN

During the year, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressed) Act, 2013.

ACKNOWLEDGEMENT:

We would like to thank our Bankers, Auditors, RTA and members for extending their full Co-operation during the year.

Place: Surat For the Board of Director

Date: 06.07.2018 ZOTA HEALTH CARE LIMITED

Sd/- Sd/-

Moxesh Ketanbhai Zota Himanshu Muktilal Zota

Managing Director Whole-time Director

DIN:07625219 DIN:01097722

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